A useful monthly pack answers four questions: did we make money last month, is that money real, where is it going, and what does the next quarter look like if nothing changes. Everything else in the file is supporting detail.
A common problem is a decent pack that nobody questions: filed the day it arrives and opened again only when the bank gets tight.
What belongs in the pack?
Five things belong in it, on a few pages.
- Profit and loss for the month and the year to date, set against your budget and against the same month last year. Two comparisons, because a good month against a bad year tells you very little on its own.
- Gross margin split by the kind of work you do, rather than one blended figure. Many owners have never seen this split, and it changes more decisions than any other section.
- The cash position with a short forecast — eight to thirteen weeks ahead, showing what is due in and out. The forecast is the part you can act on.
- Debtors and creditors with ageing, so you can see who is slow, how slow, and what you are sitting on that has not been chased.
- Three or four numbers specific to your business: utilisation, jobs won against quoted, average order value, recovery rate per hour, whatever drives your result.
That is the shape of the management accounts we produce at Buzz Accounting, and the rest of it — depreciation schedules, nominal ledger detail — belongs in the file rather than in front of you.
When should it land?
Aim for ten to fifteen working days after month end. A pack with two sensible estimates in it on the twelfth working day is more useful than an exact one in week six, when the quarter is half spent.
When packs are habitually late the cause is often upstream of the accountant: bank transactions not reconciled weekly, purchase invoices arriving in a bundle at the end of the month, or sales invoices raised late. Fix the input routine first.
Which four questions should you ask it?
Spend ten minutes on the same four questions every month.
- Did we make money, and where did it come from? Look at the split: which type of work, which customer group, which part of the business carried the month.
- Is the profit real? Compare it against the movement in cash and the movement in debtors.
- What moved, and why? Take the three biggest variances against budget and name the cause of each one. If nobody can explain a variance, that is the thing to look into this month.
- What does the next quarter look like if nothing changes? The forecast is the only part of the pack that looks ahead, so question it.
An illustration of what the margin split does, not a client. A business bills £95,000 a month at a blended gross margin of 34%, and is happy enough with that. Split by type of work: installations £46,000 at 41%, service contracts £28,000 at 36%, small callouts £21,000 at 11% once the drive time is costed properly. The callouts produce about £2,300 of gross profit a month and take a fifth of the engineers’ week. The headline 34% hides this.
What should you do after a bad month?
Name the cause, decide one action, put a date on it, and check it in next month’s pack. Five changes at once make the following month impossible to read.
A single month is not a trend. Much of what looks alarming in one month is timing: a big invoice raised on the first of the following month, a supplier paid twice in a period, a quiet fortnight in August. The year-to-date column shows the trend.
Where does coaching fit?
The pack tells you what happened. Coaching adds someone who reads the figures with you each month, asks the questions above, and comes back a fortnight later to ask what happened to the action you agreed.
That is what Financial Coaching is at Buzz — regular sessions on your own numbers, run with the accountancy practice alongside it, so sessions use current figures. If you would rather start on your own, the six numbers guide and the monthly review guide cover the routine, and the Profit Improvement Calculator shows what a small move in each lever is worth.
Peter Allen is Co-Founder and Finance Director of Buzz Accounting and runs Financial Coaching at Buzz Coaching. He has twenty years in finance and is licensed by the AAT. If your bookkeeping is not current enough to produce a monthly pack, start with getting the bookkeeping onto a weekly routine — the pack follows from that.
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Frequently asked questions
How soon after month end should management accounts arrive?
Ten to fifteen working days is a reasonable target for an owner-managed business, and the date matters more than the polish. A pack that lands on the twelfth working day with two estimates in it is more useful than a perfect one that arrives in week six, because by then you are looking at history and the quarter is half gone. If yours is consistently late, the cause is often upstream: bank feeds not reconciled, purchase invoices arriving in a carrier bag, sales not raised until someone chases. Fix the input first.
What is the difference between management accounts and year-end accounts?
Year-end accounts are a statutory record, prepared to a legal format for Companies House and HMRC, and they are usually finished months after the period they describe. Management accounts are prepared for you, monthly or quarterly, in whatever shape helps you run the business: margin by type of work, the cash position, the numbers you have decided matter. They do not have to satisfy anyone but you, they can carry sensible estimates, and their purpose is to inform decisions while there is still time to act.
Do I need a bookkeeper to get a monthly pack?
You need the bookkeeping done close to real time, by someone. Plenty of owners do it themselves in cloud software with bank feeds and a set routine; plenty hand it over because the hour a week is better spent selling. Doing three months in one sitting before a deadline makes the pack too late to act on. Decide who does it and when it happens weekly, and the monthly pack becomes a small job rather than a project. Weekly reconciliation keeps the job small.
What if my accountant only does the year end?
Ask for management accounts and see what comes back. Some firms offer them without mentioning it. If the answer is no, or the quote is for a pack that arrives six weeks late, that is a service question rather than a price one. You are looking for figures you get in time to use, with someone who will sit down and go through them with you. Buzz Accounting produces management accounts, and Financial Coaching goes through them with you. Ask for a sample pack before you agree a fee.